How to remake a state

One hour a week for several weeks, the investigators would ask John Deskins about West Virginia’s greatest problems.

One fact kept coming up.

There aren’t enough people working in West Virginia, by a lot. Right now, 53 percent of adults in the state work or are seeking work — 10 points below the national average and lowest among the 50 states.

Deskins, a West Virginia University economist, has made this clear before. Many times. But this time, someone new was listening.

The people who met with Deskins and more than 60 others across West Virginia were from McKinsey & Co., a global management consulting firm. At the request of WVU, Marshall University and the West Virginia Department of Commerce, the firm investigated and put together a summary of West Virginia’s greatest barriers to economic growth, markers of progress and areas where there’s still much progress to be made. The resulting plan is called West Virginia Forward.

They did this because someone known for grand ideas thought it was past time for West Virginia to become its true self. At the unveiling of the plan, WVU President E. Gordon Gee, who had commissioned a similar study in Ohio, said this:

"Our state is crying out for change, but change does not mean shifting funds around or raising our ranks in quality-of-life polls," Gee said. "Change means elevating our vision of what is possible. It means recognizing our assets and exploring new opportunities for growth. Above all, it means abandoning our negative state self-image."

Rocky Goodwin, WVU senior associate vice president for academic and public strategy, is leading the implementation of the West Virginia Forward plan, which builds on and draws attention to work already being done while pointing to new opportunities.

"Too often I think we’ve tried to tackle intractable challenges with a singular perspective and when the solution isn’t either successful or readily identifiable, we back away and say that’s not solvable," Goodwin said. "Instead we want to make sure that we have a multitude of perspectives and voices as we look at these issues in a different way."

The state has large-scale concerns: workforce participation, educational attainment, innovation and business development, and infrastructure. But there are also ways to start resolving them tomorrow, next year, over the next 20 years.

Some areas can be targeted right away, like diversification in industries such as the petrochemical sector and fostering growth in entrepreneurship. Others, like growth in the health sciences industry, can take longer. In this story we’ll look at only a few of the developments coming out of the University that are addressing the state’s most difficult problems. You can see the entire West Virginia Forward summary at wvforward.wvu.edu.

"[President Gee] saw both the need for a unifying effort but also acknowledged that although WVU is a thought leader in the state and can be a research engine, that we can’t do it alone and that we need to link arms with others across the state, the region, federal government and local government and that that will be the best way to realize the change that we want to see," Goodwin said.

By the numbers, growth is a giant slow to awaken. In the economic outlook for the next five years, Deskins, director of the Bureau for Business and Economic Research in the College of Business and Economics, predicted a 0.7 percent employment growth each year in West Virginia, below the 0.9 percent growth predicted nationally.

"It’s kind of baby steps," Deskins said. "It’s not like you can just fix one problem. All these problems are very much intertwined."

One speedy path to economic growth, Deskins says, is the occurrence of a positive shock. The kind of shock where the largest power company in the world comes to you, on a regular day in November, and says they want to invest more than $80 billion in your area.

But this shock is actually happening.

Made in WV

It seems like big things just happen with luck.

If you’re not in the know, it looked like China Energy Investment Corp. had a hat filled with the names of every U.S. state and country in the world and West Virginia’s name was the lucky one that got pulled.

On Nov. 9, West Virginia signed a memorandum of understanding with the company, which is expected to invest $83.7 billion in the state over 20 years in natural gas development. That’s more than the state’s economic output in a single year and is being hailed as an economic game-changer.

But the story didn’t start that day, and luck had nothing to do with it. It started in 2003 with a subsidiary of a predecessor of China Energy, Shenhua Coal Liquefaction Co. Ltd., which entered an agreement with WVU to study the consequences of turning coal into fuel and chemicals in China. Other projects between the University and company developed at the U.S.-China Energy Center hosted at WVU, including work on carbon storage.

And then, two years ago, Shenhua Group signed an agreement with West Virginia, Pennsylvania and Ohio. They wanted to create a tri-state Appalachian gas storage hub that would be more than a receptacle for the plentiful natural gas stranded in the Marcellus Shale under the mountains and away from gas pipelines. It would be the start of petrochemical production, separating out the butane, ethane, propane, ethylene and propylene from gas that is largely methane and turning it into products like plastic and polymers right in Appalachia.

Brian Anderson, director of the WVU Energy Institute, said the development of a petrochemical industry from gas in the state — as estimated by the American Chemistry Council — could be 101,000 jobs in production and related suppliers and distributors.

"This is now a time that we can build an industry that adds a value to the raw material to where what we ship out, maybe it’s a LEGO, maybe it’s a plastic bottle or key component that goes into an automobile," Anderson said. "It’s a much higher value of material than just the raw material that we’re taking out of the ground and so that’s really the key here is that when we do that, when we chop down a tree and build a piece of furniture out of it, it’s so much more valuable than the raw lumber and that’s what we’re trying to do is add value to the resource that we use."

At a WVU gas research group open house, Anderson said, "Wealth is created where value is added, and for 150 years in the state of West Virginia we did not subscribe to that or we extracted our resources and sent them out as commodities. Now is the time we can change that."

While the business side is developing, there’s a technology side that’s readying to move forward the state’s industrial growth. Almost a decade ago, now Provost Joyce McConnell (then Dean of the WVU College of Law), Statler College Dean Gene Cilento and others looked around and saw that if they were going to be ready for the gas industry’s growth in the area, that had to start immediately.

They sought funding to hire people in the gas area: in business, law, natural resources and engineering. And in January of 2016, the University hired the last person of the team, the one who would lead the gas group, a person they all agreed was perfect for the job.

John Hu, who grew up in China, had just been director of technology innovation at Koch Industries. He’d been a refining technologist at BP Oil and a research and development manager at the Pacific Northwest National Laboratory.

So why come to WVU? What did we have that industry didn’t?

Hu addressed that question. "When I see my career, I ask myself, what’s my contribution to the science community?"

In private industry you have to stay focused on a specific task and area, he said. At BP Oil, he focused only on oil. And companies need innovations that will pay off immediately. They leave the beginning of research to other people. People like Hu’s team.

So far it's paying off.

The group has garnered conservatively $10 million in gas research funding, including Hu’s own work with Shell and the National Energy Technology Laboratory to create chemicals from natural gas much more energy efficiently than the norm using microwave plasma catalysis. His team is engaging with questions surrounding financial markets, law and government in the area of gas, and working to create new inventions to make the region’s gas industry safe and sustainable.

"It is really in academic research that you can target the future," Hu said.

For Thou Art With Me

Lori Hazlehurst is a friendly woman whose eyes laugh behind her glasses as she explains a chemical bond. Her office in Health Sciences is in a building filled with windows, giving it a light and cheery feeling.

Yet Hazlehurst is walking through the valley of death.

She is following the bone tumor multiple myeloma and getting ready to strike at the moment when the tumor appears undefeatable. Hazlehurst and her colleague Mark McLaughlin have created the molecule MTI-101 and are examining how it targets the bond between the myeloma tumor and bone in hopes of creating a last-line-of-defense treatment for patients who have no other option.

As existing treatments work to shrink the tumor, its bond with bone strengthens. If that bond dissolves, the tumor loses its power on the body.

Hazlehurst and McLaughlin are also walking through a second valley of death. They run a startup, Modulation Therapeutics, headquartered at WVU, which is developing treatments for multiple myeloma, melanoma and brain cancer.

There’s this point in a drug or therapeutic’s life between early development in a lab and clinical trials where the invention can be easily shelved and forgotten forever. This happened on a drug Hazlehurst worked on as a grad student.

But Hazlehurst has a greater chance of beating those odds because her startup has secured enough funding through Small Business Innovation Research grants that if all goes well, her company’s therapeutics could be taken to the point of clinical trials where a pharmaceutical company would take over.

"What allows us to translate it is these small companies because then you can raise money to do studies that the basic science mission can’t fund," she said.

"It’s unfortunate that there’s this gap that nobody’s willing to take the risk."

But there are a few risk takers working to give patients new hope. Hazlehurst’s startup was the first in the health area to be recruited to WVU, which has been bringing in researchers in cancer, neuroscience and heart and vascular specialties while building a Health Innovation Center.

Rich Giersch, BSW ’93, founded and leads the innovation center, co-founded Valtari Bio — a company developing stroke diagnostics — and is chairman of BioWV, the life science trade association for the state.

"We started thinking about what states like West Virginia need that doesn’t really exist here in the same concentrations or quantities — or sometimes at all — as exists in coastal regions that have typically highly intensive innovation ecosystems," Giersch said. "And one of those things is places where people that are entrepreneurs … gather and talk and share ideas."

Within two years, the center has launched or attracted eight startups and is preparing to house more now that neuroscientist Dr. Ali Rezai — whose inventions have already resulted in five startups — has relocated to the University. The Innovation Center is expected to expand to serve the Statler College of Engineering and Mineral Resources as well as the Davis College. Other resources such as LaunchLab and the Office of Technology Transfer are available to faculty, students and others who need them.

"Up until recently, the University and the state hadn’t created an effective sieve to catch all of these ideas as they’re being created," he said. "The greatest natural resource of West Virginia are the minds that we educate and graduate every year at our colleges and universities across the state. WVU Innovation Center is working to create a greater 'stickiness' for those people and ideas to stay in West Virginia or for others to come here and work with our world-class researchers and resources."

As he helps researchers set up their businesses, Giersch is looking at innovations that are new to the world.

"The researchers here as well as those coming to WVU are doing work that is not just intellectually interesting, it is changing the health and economic outcomes of West Virginians and others around the world," he said.

Giersch knew when he lived outside the state that West Virginia needed to do something different to keep people here and attract others. Now he sees his part of it at the WVU Innovation Center: helping create companies and translate ideas to practice.

"We’re at an inflection point that our future in the state’s going to be different than our past," Giersch said. "And it’s up to us to figure out what that future’s going to be. We have a wealth of student, research and clinical resources to build with. There are interested and engaged corporate and government partners and a sense of urgency from institutional leaders. The challenges we are addressing did not appear overnight and they won’t resolve quickly, but our future is bright."

Hey, Alexa, How Do I Start A Company?

In 2012, Tom Doyle, living in Southern California, read about David Graham’s research in the Statler College magazine. Sure it was interesting technology that could save energy in electronic devices. But when Doyle looked at it, he saw a company. A company that could solve a big challenge with the oncoming voice-sensing revolution in the electronics industry.

Graham, Vinod Kulathumani and PhD student Brandon Rumberg were working on a way to use an analog chip to reduce power consumption in wireless sensor networks. Doyle, who’s worked in the electronics industry for decades, wrote to Graham and asked if he’d considered commercializing the semiconductor and software technology.

Doyle, BS ’85, Electrical Engineering, is now CEO of Aspinity, a technology company based in Morgantown that is developing a chip that could one day be used in voice-activated technology like Amazon’s Echo and Google Home as well as battery-powered health monitors and industrial sensors that "listen" for abnormalities and inefficiencies.

"When Tom reached out to us about commercializing, that was sort of at a point when I was worrying that our research might never go anywhere," said co-founder Rumberg, PhD ’15, Electrical Engineering.

With a startup, the technology has already gone somewhere. In 2017, the company was invited to participate in the Alexa Accelerator designed to advance voice-powered technologies with the expertise and support of Amazon.

That was big.

"It gave us the confidence," Doyle said. "But it also confirmed what we were doing was not only a unique approach with unique technology but that it was desired."

Doyle, originally from Wheeling, W.Va., said people don’t think about West Virginia when they think about a home for tech companies. But it doesn’t have to be that way. They would like Aspinity to stay in West Virginia, and they’ve been able to grow with help from the Office of Innovation and Office of Technology Transfer at WVU.

"Thanks to backing from WVU, as well as out-of-state investors like the Alexa Fund, Aspinity an hire the next generation of engineers graduating from WVU," Doyle said.

"Brandon and others would surely find jobs out of the state, as I did 30 years ago, but now there are local options."

Matt Harbaugh, associate vice president of transformation at WVU, points to Aspinity as an example of the kinds of entrepreneurship that can happen in the state. We have expertise here. But the biggest need is investment. And the only funding that McKinsey found in its research was $7 million for later-stage companies.

That is changing this year in a huge way. Harbaugh is currently working with private investors to create Mountain State Capital, a private venture capital fund worth $25 million that would support new ideas and allow them to flourish in West Virginia. It’s the latest of many investment pools to pop up in West Virginia with the University’s help.

With the help of Huntington Bank, Harbaugh started a $50,000 fund for student entrepreneurs. A second endeavor, the Mountaineer Innovation Fund, is using $1 million of donor money to invest in research spinouts. A third group, the West Virginia Growth Investment Fund, is an angel fund in which private individuals write checks out of their own pocket to invest in companies; seven companies have received funding from this group so far.

Harbaugh pointed out that WVU has been putting pieces in place over the last four years or so, and these steps forward fit within the framework of West Virginia Forward. Such as developing the investment funds. Or attracting researchers who are creating products and businesses.

One marker that the McKinsey study looked at was grants awarded through the government Small Business Innovation Research Program, which bridges the funding gap between academia and industry. By recruiting Lori Hazlehurst and Mark McLaughlin, who are developing the cancer therapeutics, West Virginia’s SBIR award numbers are brought up to about the annual national average of $8.6 million.

"The nice thing with West Virginia Forward and the McKinsey study is it really pointed out that the changes we’ve been making over the past three or four years at WVU are directly in line with the recommendations that they came out with," Harbaugh said.

Deskins, the WVU economist whose data and analysis was incorporated into the West Virginia Forward plan, said that encouraging the growth of entrepreneurs is central to advancing the state’s economy.

"We want other industries to grow in West Virginia," he said. "And we want to figure out what industries will work for a specific economic climate. We have to have people who start new businesses and who experiment, and the entrepreneurial process will ultimately find what works and what doesn’t work for our specific circumstances.

"But we have to rely on entrepreneurs, and we have to support and promote and encourage entrepreneurs to ultimately find the right industrial mix for the state."